Ecommerce & Digital
Business Funding for SaaS Companies
SaaS companies sit in a favorable position with lenders because of their recurring revenue model, but early-stage SaaS businesses burn cash on development and sales before reaching profitability. The standard SaaS growth playbook requires spending $1.20 to $1.50 to acquire each $1.00 of ARR, which means you need external capital to grow. Even profitable SaaS companies need financing to fund hiring sprints, product launches, and market expansion.
Common Uses
What SaaS Companies Use Funding For
- Hire engineering and product teams to accelerate feature development
- Fund sales and marketing to grow annual recurring revenue (ARR)
- Invest in cloud infrastructure, security certifications, and compliance frameworks
- Acquire a complementary SaaS product to expand your platform's capabilities
Funding Options
Best Funding Types for SaaS Companies
Revenue-Based Financing
Borrow a multiple of your monthly recurring revenue and repay as a fixed percentage of monthly income. SaaS-focused lenders like Pipe, Capchase, and Lighter Capital evaluate your ARR, net revenue retention, and growth rate.
Venture Debt
Supplement equity funding with non-dilutive debt that provides additional runway between funding rounds. Venture debt lenders look at your ARR trajectory, burn rate, and remaining equity runway to structure terms.
ARR-Based Credit Line
A revolving credit facility sized as a multiple of your annual recurring revenue. Draw funds for hiring, marketing, or product development and repay from subscription collections. This is the most flexible option for SaaS companies past $1M ARR.
What Lenders Look For
Qualification Notes for SaaS Companies
Related Industries
Related Ecommerce & Digital Funding
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